Interesting article. College sports are not what we have always been used to. Sources: ACC joins Big 12, to settle House v. NCAA
I'm just glad I have other things to occupy me now. "College sports" doesn't exist anymore, so I won't be missing anything.
Hopefully this will pave the way for some reasonable guardrails to enable some rational administration and competition. Even though we are among those that can benefit the most, the current wild, wild west environment isn't sustainable nor is it good for anybody long term
My biggest fear is that this will evolve to where the athletes will have only a loose association with the University and actually attending class will be optional.
Terry, I think this the key litmus test. The school ties and commitment to the team are the characteristics that are important to me. When those things are gone…so am I .
Schools can now pay them, what could go wrong? The NCAA and its five power conferences have agreed to allow schools to directly pay players for the first time in the 100-plus-year history of college sports. The NCAA and its leagues are moving forward with a multibillion-dollar agreement to settle three pending federal antitrust cases. The NCAA will pay more than $2.7 billion in damages over 10 years to past and current athletes, sources told ESPN. Sources said the parties also have agreed to a revenue-sharing plan allowing each school to share up to roughly $20 million per year with its athletes NCAA, Power 5 agree to let schools pay players
Pandor's box is now torn wide open. Football players are now just like the band that's hired to entertain the students at the prom dance. They're paid entertainers. So what's on the horizon? First they are or will be ruled employees. Hope they can figure out turbotax. Next of course will be the union organizers. That will quickly be followed by work stoppages for higher wages. Then we have the claims for Workman's Comp. by those players who don't get drafted or catch on with pro teams. All of a sudden they have some residual health problem. Who wins? Not the fans. But there's the lineup: lawyers, agents, union organizers, tax accountants all sticking their snouts into the trough with the TV revenue in it.
An opinion piece on Bloomberg suggests that College Athletics needs to embrace Private Equity. Is this a good idea or just another nail in the coffin? BTW, what's the difference between Private Equity and Hedge Funds that are buying up assets all across the Healthcare industry? BTW the Bloomberg article is pay walled. ___________ From Bloomberg: The NCAA Has a $15 Billion Problem. Private Equity Can Help. On Thursday, the NCAA and its power conference schools approved a legal settlement that will pay past, current and future Division I college athletes more than $15 billion over a decade. Some of that money is back damages for what the NCAA’s amateurism rules denied players dating back to 2016. The rest will be paid out in a revenue-sharing model that gives athletes a cut of media rights and other earnings the NCAA has long denied them. That’s a just outcome for athletes. But it’s causing heartburn for Division I athletic directors. At the largest public universities, those multi-million-dollar obligations could average 40-45% of an athletic department’s budget. To help foot the bill, schools should seek new media rights from sports that the NCAA has long overlooked and undervalued. The good news is they have a natural partner to help them: private equity funds with sports-investing experience.
I agree with Stu that the Red Lobster situation is a red flag. but I also think it's an outlier My son works with private equity firms in his corporate finance profession. Through him I've learned a little bit about private equity but not nearly enough to make me fluent on the topic. I just have a gut feeling that it's not appropriate for the NCAA situation. Maybe BT has some thoughts?
Sorry I'm late to the game here, we've been on the road a fair bit. First let me say that article was pretty much a very slanted hit piece on private equity. Private equity firms play an important role in the modern day economy as a source of capital for many companies when traditional financing arrangements were not available or unattractive. John Deere, Staples, Petco, Hilton along with many other well known companies are currently or recently owned by PE firms. As in most things in our world, not all PE investments work out well but let's not judge the entirety of the industry on the small subset of failures. Re: PE and college sports, I just have a hard time seeing a productive role here, at least with the big schools, the winners of the conference lottery. The issue with them as I see it is not that they are lacking in capital, but that now that they are flush with cash flow, the courts have thrown them a curve and mandated that they need to share their fortune with the players, a vastly different distribution than the historical model of administration, staff and facilities only. Consider over the last 20 years the rate of increase of coaches salaries has been more than 2x the rate of tuition increases and one could argue the relative time/work commitment from the players has increased as well and we've got a situation where the revenue generated by the fruits of the labors of the key constituents is perceived, and rightly so imo, as increasingly disproportional. They just need to figure out a new model that works, the others have a problem.... For the others, it's clear that if they want to compete at the highest levels without the benefit of mountains of TV money, they're gonna need to tap additional sources of capital, public or private, to fund their investments. Hard for me to see the public stepping up to fund a college football program when we're already sitting on mountains of debt that need tax revenues to service and private sources, exclusive of wealthy benefactors, will need to look long and hard at how they're going to generate a return on their investment. I don't see it....the assets and cash flows available just don't lend themselves to profitable financing arrangements.